USD/JPY erase early losses, turns positive at 104.75

After dipping below 104.00 handle, strong buying interest at lower levels helped the USD/JPY pair to erase all of its early losses and turn flat to currently trade around 104.75 region.

The Japanese Yen came under renewed selling pressure after Japanese government trimmed its 2016 CPI projection to +0.4% as against +1.2% estimated in Jan. Adding to the bullish sentiment surrounding the USD/JPY pair, adviser to Japanese PM, Honda, said that Japan needs JPY 10trln Yen in fiscal spending and BOJ should also consider expanding monetary stimulus this month. 

In absence of any major economic releases, the pair would continue to be driven by talks around fresh Japanese stimulus package in order to support the ailing economy and combat low inflation.

Technical levels to watch

On the immediate upside, 105.00 psychological mark remains key resistance to watch for, which if conquered seems to lift the pair immediately towards pre-Brexit closing highs resistance near 106.00 round figure.

On the flip side, weakness back below 104.00 handle could trigger a corrective move towards 103.30. The fall could further get extended towards 102.00 level in the near-term.